Retirement statistics are not glowing. Many people cannot afford to retire and retirees never thought they’d have to stretch their income as much as they do. Some blame it on the economy, others on increased lifespan. Either way, you must build your wealth when you’re young, and here are three steps to do so.

1. Show Yourself the Money

According to Investopedia, the equation for building wealth is simple: “Income – spending = savings.” Your first step is to make enough income to cover your monthly savings and have some leftover to invest. This isn’t as easy as it might seem, especially with the current and rising rates of inflation. Yes, as of 2018 the unemployment rate in the United States is much lower than it was 10 years ago, and yes, there is positive energy surrounding job forecasts in the future. What many are not taking into account, however, is that inflation is also higher than ever, and for most, getting ahead remains impossible.

You must bring in enough earned income to cover your living expenses and have enough left over to use as passive income to invest, so never sell yourself short on the job market. Demand the salary you deserve and work hard to earn it. If you haven’t completed your education, do so. There are plenty of accredited online degree options available, so get your bachelor’s and master’s degrees. Principal Standard Group CEO Peter Foyo understands the importance of education. He runs the educational charity World Fund to give Latin American children a chance at a bright future.

2. Save Where You Can

The next step is to be wise with what you earn. You may want to drive around in a lean, mean racing machine, but Forbes contributor Jeff Rose explains you’ll do better with a clunker. Okay, you don’t have to settle for a clunker, but you should settle for a vehicle you can afford. You should also be wise in your living arrangements. The less money you spend on monthly expenses, the more money you have to grow. Research all purchases – no matter what they are – to ensure you buy wisely, and don’t fall into the want-trumps-need trap. Don’t buy it unless you really need it.

Stay on top of your expenses by logging everything for a month or two. Then, sit down and look at your records to see where you can make cuts. Build your budget around your cost-cutting plan and make it as tight as possible without depriving yourself of necessities. The final result you want is to have money that you can invest after all of your expenses are paid. This is why it’s wise to live within your means. If you buy an affordable car and pay it off, you’ll have that car payment to invest. If you live in affordable housing, not all of your income will go to a mortgage or rent.

3. Invest

Finally, take the leftover money and invest it wisely. Some of the safest approaches include putting extra money into your employer’s retirement program (if you have that benefit), opening up an individual or Roth IRA, and balancing your investments between low and moderate-to-high risk equities. One crucial thing to keep in mind is diversification is key. Make certain you choose a variety of investment vehicles. Never put all your eggs in one basket. For example, if you invest everything in real estate and the market crashes, you lose everything.

You cannot build wealth through investing if you do not have money to invest in the first place. Place yourself on the road to riches and a happy retirement by working hard and saving now. You’ll be surprised how quickly you can build your portfolio if you simply use your money wisely.